The UK supply industry is facing unprecedented challenges over the coming months. This is not new and has been developing steadily over the past 18 months but it is only now starting to feed through to the general public and consumers who are now seeing increasing empty shelves or the dreaded ‘currently out of stock’ messages on websites. Retail prices are steadily rising and will undoubtably rise a lot more over the coming months.
The problem is caused by the double hit of Covid-19 and Brexit and whilst the former affects most western economies the latter is very particular to the UK. The list of problems includes:
- Equipment (containers) in the wrong places leading to shortages.
- Inefficient ports due to years of lack of investment (especially in the USA).
- Lack of shipping due to many years of little investment in new shipping.
- Markedly increase in demand for goods (especially in the USA).
- Intermittent closures of ports (partial or full) in China due to Covid outbreaks.
- Shipping lines taking advantage of the crisis to subject shippers to huge price rises.
- Shortage of semiconductor chips
- Congestion in UK ports due to inefficiencies and Covid restrictions
- Severe shortage of haulage availability in UK due to driver shortages
- Rising cost of UK haulage due to supply and demand pressures
The result of all this is disruption, lack of supplies leading to empty shelves and shortages of parts for production lines and massively increased costs leading to price hikes and in some cases non viability of businesses.
As in all crises there will be winners and losers. The important thing for individuals, companies and even countries is to make sure you take advantage of the opportunities that arise as a result of these disruptions so that you are in the former category not the latter. There are always ways to mitigate problems which comes from clear thinking forward planning and looking for fresh solutions. These may include such manoeuvres as relocating and shortening supply chains, moving manufacturing closer to hope, holding greater stocks and not relying on a ‘just in time’ approach, looking for new facilitators and companies to assist with finding better and new solutions for shipping, haulage etc. What is clear is that doing nothing, relying on existing systems and supplies is not sustainable for many companies and companies which adopt that approach will in all probability find themselves in the latter of the above categories.
At China-UK Trade Consultants we regularly have contact with companies who are using un reliable suppliers, paying too much for products paying too much for shipping and getting unacceptable delays to shipping. Often they can be helped using innovative proactive approaches and having people on the ground enables us to help sort at least some of these problems steer these companies in the right direction. Accepting the status quo is not a viable approach!